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Summarised Interim research report
1. Summary of past research
2. Overcoming the barriers
3. The BME and SME experience
4. Conclusions



1. Summary of past research.

Current procurement practices within The Greater London Authority (GLA) family-
• London Development Agency
• Transport For London
• Metropolitan Police Authority
• London Fire & Emergency Planning Authority
• Greater London Authority

Barriers to engaging with BME SME
• Contracts offered by the GLA are often too large for SMEs
• GLA find it hard to identify SME suppliers’ presence in the market
• In a bid to reduce the number of government suppliers, SMEs are not in a favourable position because of their size
• There is an identified difficulty in developing contract terms and conditions that are favourable to SMEs, while upholding ‘best value’ and competitiveness concerns.
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2. Overcoming the barriers

Getting through to SME suppliers.
Communication between the GLA and SMEs is being improved by the GLA undertaking to publicise contracting opportunities, procurement process overviews, supplier requirements and FAQs through various websites.

Engaging SMEs
Through publicity events and press activity, the GLA will develop a relationship with BME and SME businesses.

Division of labour
Contracts over £153,376 cannot be broken down and applied for in chunks, however, several small firms can fulfil roles within such a contract as long as one large firm tenders for the overall contract. This way SMEs can benefit from large contracts, which they would have otherwise been too small to tender for.

Diversity monitoring
The GLA will institute new methods of monitoring the types of firms who tender for contracts to ensure that BME and SMEs are well represented.

Diversity in designing contracts
Certain current contract stipulations are automatically unfavourable for some SMEs, such as, regulations about insurances and annual turnover. Certain thresholds have been lowered in order to become accessible to SMEs, however present legal implications mean that they cannot all be lowered.

Capacity building
The GLA has embarked on capacity building through its consortium. SMEs require tailored training and assistance in understanding the procurement process. This training will build their capacity to tender effectively and win lucrative contracts.
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3. The BME and SME experience

6000 Small and Medium sized businesses were contacted

Research Findings:

42% of respondents were BME owned
54% of respondents had 10 employees or less
28.7% of SME respondents had an annul turnover over £1,000,000
32% had not tendered for pubic/private sector contracts (44% of these were BME owned)
31% of BMEs who had targeted contracts worth £10,000-£49,999
41% had not won contract through competitive bidding
29% say these contracts account for a high percentage of their turnover.

SME barriers for tendering:
• Lack of knowledge about what opportunities are available
• Lack of knowledge about how to qualify as an ‘Approved Supplier’
• Lack of opportunity to ‘Meet the buyer’
• Insufficient knowledge of the tendering process
• Lack of experience in winning big tenders.
• Lack of trading records and company experience
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4. Conclusions:
• Procurement processes need to be simplified and made more accessible for SMEs
• Development of ‘approved supplier’ standard should not exclude SMEs by its design
• Supply and demand interaction needs to be more fluid
• Capacity building is required on soft skills as well as operational issues.
• SMEs need to be able to take part in large public sector developments such as London 2012.
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